First I thought a recent xorg update was just not recognising the trackpad and mouse buttons on the Acer Aspire1. Then I thought something was wrong with the Emdebian Grip installation of Squeeze, then I tried upgrading the kernel to 2.6.30 and just now I tried a Graphical Rescue Mode boot of the Lenny Debian Installer.
The trackpad is non-responsive, the mouse buttons are non-responsive. The trackpad still shows up in various system messages but simply doesn't move the pointer or activate any menus. Keyboard shortcuts still work but no mouse. (I gave away my USB mouse but I guess that's the next test.)
Could this be something other than the hardware failure that it appears?